Are Carbones Pizzeria's cash balances ever in excess of federally insured limits?

According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the company's cash and cash equivalents may, at times, exceed federal insurance limits. This is outlined within the summary of significant accounting policies. However, the company states that it does not anticipate any losses related to these balances. This information comes from the notes to the consolidated financial statements for the year ended October 31, 2024, and earlier years.

For a prospective Carbones Pizzeria franchisee, this means that the company's cash management practices involve holding funds that could surpass the coverage provided by federal deposit insurance. While the company expresses confidence that this will not result in losses, it is essential to understand the potential risks associated with this practice. Federal deposit insurance typically covers a certain amount per depositor, per insured bank, for each account ownership category. Amounts exceeding this limit could be at risk in the event of a bank failure.

It is common for larger companies to manage cash balances that exceed federal insurance limits, as they often have significant operational needs and investment strategies. These companies typically employ various risk management techniques, such as diversifying their cash holdings across multiple financial institutions or utilizing sophisticated cash management tools. While Carbones Pizzeria states they do not anticipate losses, a prospective franchisee may want to inquire about the specific measures the company takes to mitigate risks associated with holding uninsured cash balances. Understanding these practices can help a franchisee assess the financial stability and risk management capabilities of the franchisor.